Question

I import vegetable and butter from outside india vegetable is not taxable but butter is taxable I pay GST for transportation on reverse charge basis can I claim the total GST on transportation against output of butter.

Answer

Credit is restricted under Section 17 of CGST Act. Sub section (2) reads as follows:
"Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies."

As in your case supply of vegetable is an exempt supply whereas supply of butter is taxable, therefore as per aforesaid clause the amount of GST attributable to exempt supply i.e. credit amount proportionate for vegetable is not eligible. The amount of ITC attributable to exempt supply is computed as per the manner given in Rule 42 of CGST Rules. (Reply dt.18/09/2018)